The Punjab government's new wheat procurement mechanism has ignited widespread opposition from flour mill owners and drawn sharp criticism from farmers, who allege the policy unfairly favours a group of private companies at the expense of both growers and consumers. Under the scheme, the government has authorised 11 large private companies, designated as 'aggregators', to procure wheat directly from farmers under a government-backed arrangement.
According to critics, the scheme grants these companies access to government storage facilities free of charge, subsidised finance, and official guarantees on their profit margins. Many have likened the model to the Independent Power Producers (IPPs) framework, arguing that it extends similar financial guarantees to the wheat sector while transferring the financial burden to the public.
Background of the Policy Shift
The controversy follows the Punjab government's decision in 2024 to withdraw from direct wheat procurement. Acting on recommendations from the federal Ministry of National Food Security and Research, and with the approval of the provincial cabinet, the government announced its withdrawal from the wheat trade in an effort to curb alleged large-scale irregularities and corruption within the Punjab Food Department.
However, officials familiar with the matter claim that the department has continued to play a significant role in wheat procurement despite the policy shift. They further argue that the government's withdrawal initially stabilised flour prices and eased concerns over shortages. But after the Food Department resumed procurement operations in September 2025, citing flood-related concerns, flour prices rose sharply despite no reported shortage of wheat in the country.
Details of the New Procurement Scheme
Under the latest policy, aggregators are required to purchase wheat at a fixed rate of Rs3,500 per maund. However, with open market prices reportedly reaching around Rs4,000 per maund, critics claim the companies have struggled to procure wheat at the official price. This disparity has raised questions about the viability of the scheme and its impact on farmers, who may be forced to sell below market rates.
One farmer, speaking on condition of anonymity, said: 'The government is handing over the wheat trade to a few companies while leaving farmers at their mercy. We are already facing high input costs, and now we have to sell at a price that doesn't cover our expenses.'
Flour mill owners have also expressed strong opposition. The Pakistan Flour Mills Association (PFMA) has warned that the policy could lead to market manipulation and higher flour prices for consumers. 'This model will create a monopoly and destroy the competitive market,' a PFMA spokesperson said. 'The government should ensure a level playing field for all stakeholders.'
Impact on Prices and Supply
Officials claim that the government's initial withdrawal from procurement helped stabilise prices. According to data from the Punjab Food Department, flour prices dropped by 10% in the months following the 2024 decision. However, after the department resumed operations in September 2025, prices surged by 15% within weeks, despite adequate wheat stocks.
Critics argue that the resumption of government procurement, combined with the new aggregator scheme, has created confusion in the market. 'The government cannot be both a regulator and a player in the market. This dual role is causing distortions,' said Dr. Imran Ali, an agricultural economist at the University of Agriculture, Faisalabad.
Reactions and Demands
Farmers' organisations have called for the immediate withdrawal of the aggregator scheme and a return to direct government procurement at support prices. 'We demand that the government purchase wheat directly from farmers at a fair price, as it did before. This privatisation will only benefit a few,' said Muhammad Riaz, a farmer leader from Sahiwal.
The Punjab government has defended the policy, stating that it aims to reduce corruption and improve efficiency. A spokesperson for the Punjab Food Department said: 'The aggregator model is designed to bring transparency and private sector expertise. We are confident it will benefit all stakeholders in the long run.'
However, with flour prices rising and farmers protesting, the government faces mounting pressure to reconsider its approach. The controversy is likely to intensify in the coming weeks as the wheat harvesting season approaches.
